Gold and Silver Trade Sharply Lower on Trade War Talks

September 5, 2019 - 7:15pm

by Gary Wagner

A Call from Vice Premier Liu He to U.S. Trade Representative Robert Lighthizer has set the stage for a resumption of talks. The ADP jobs report for the private sector came in at a robust 195,000 new jobs added in August. The ADP jobs report is giving market participants an indication that tomorrow’s Labor Department nonfarm payroll jobs report will also be a robust number. These events caused U.S. equities to rise dramatically, as gold and silver fell sharply lower.

The net result of this tentative meeting and a solid jobs report by ADP resulted in a gain of 372.68 points in the Dow Jones industrial average. It also moved the precious metals sharply lower with gold futures falling $34.90 or 2.2%, and silver falling $0.74 a 4.13% decline.

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According to MarketWatch, “News that the U.S. and China agreed to work toward a fresh round of trade talks next month provided a boost to U.S. and global stock markets, and a stronger-than-expected private-sector employment data also helped to ease worries about a slowdown in the economy, damaging the metal’s haven appeal.”

Also reported by MarketWatch, Edward Moya, senior market analyst at Oanda said, “We’ve been here before and will unlikely see safe havens sold hard until we get meaningful de-escalation from both the Chinese and American tariffs, Gold is also approaching an overbought level that is similar to the oversold moment we saw in 2013, which signaled another major move which eventually identified a key trading range.”

On a technical basis today’s decline in both gold and silver did initiate chart damage as it broke the recent trend of higher pricing in both metals. This can be interpreted as a short-term selloff. However, if this trend continues it could take both gold and silver pricing lower. Currently the major support level in gold comes in at the .23% retracement which is $1498. In silver major support can be found at $18.24 which is the .38% retracement level.

Whether or not today’s sharp decline in gold and silver is the beginning of a down trend, or a short-term price dip will be answered over time.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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